Pressure for profits

Under ownership of Mittal Steel, Sparrows Point plant is under constant pressure to increase efficiency.

May 21, 2006|By Allison Connolly Special to The Morning Call - Tribune

Every 40 minutes at Sparrows Point, a 410-ton crane lifts a ladle of molten iron and tilts it toward the mouth of a steelmaking furnace.

Flames and sparks shoot out as liquid iron roars into the furnace, lighting up the cavernous plant like fireworks on the Fourth of July.

Forty years ago, fires from open hearths would have illuminated hundreds of faces around the shop floor. Today, seven workers operate two furnaces and a couple of cranes.

Thanks largely to automation, but also to the reality of the much-consolidated steel industry, what once was the world's largest steel complex under the ownership of Bethlehem Steel Corp. has less than one-tenth the work force it had in 1969. Those 2,471 workers produce about 3 million tons of steel a year, more than half as much as 26,500 people did back then.

But it's never efficient enough.

Mittal Steel Co. NV, which became Sparrows Point's third owner in five years in 2005, became the world's most profitable steelmaker by buying up plants and mines from South Africa to Romania to Burns Harbor, Ind., and then ruthlessly cutting costs. All of Mittal's plants are continually pitted against each other.

It's a lesson 400 workers at a Mittal plant in County Cork, Ireland, learned one Friday in June 2001 when they were told to go home, the 50-year-old plant was to be closed. The decision was made shortly after employees refused to accept a 10 percent pay cut and fewer vacation days to stem multimillion-dollar losses.

"Their view is cost, cost, cost," said Sparrows Point's new general manager, Thomas Russo, who this month became the first plant employee in 30 years to be elevated to the top post. "Internally in the plant, we live that every day."

Russo's challenge is to motivate an already stressed work force to increase production and reduce errors; at the same time, he must convince Mittal that Sparrows Point, one of the most expensive plants in a bottom-line-driven company, is worth keeping open.

In a windowed room above the floor of the plant's cold mill, Walt Ireson, senior center operator, makes sure all the machines are operating correctly. Thanks to technology, he does the job that nearly a dozen workers once did.

One of the touch screens features a color-coded topographical map that alerts Ireson to any flaws in the steel. The system was designed and patented by Russo, a mechanical engineer by training, and a group of workers from the shop floor.

The 850,000-square-foot cold mill is where hot steel is rolled into thin sheets and packaged in coils for customers. It was one of Bethlehem's last big investments at Sparrows Point before it filed for bankruptcy.

The mill needs only half as many workers to produce the coils as the old mill did.

"We just walked two-thirds of the line and haven't seen an operator yet," said manager Steve Taylor, leading a tour of members of the Regional Manufacturing Institute last month.

When everything's running smoothly, steelmaking looks effortless. A handful of workers watch as the machines do what they are supposed to do. But when machinery breaks down -- something not uncommon in a plant that cast its first pig iron 117 years ago -- that's when the bare-bones work force feels the pressure of three years of downsizing and the constant threat of losing their jobs.

"Sparrows Point became the darling of the company for cost-cutting," said Jeff Ervin, 51, a maintenance worker in the tin mill. "But that put more work on the people."

Stretched thin

One morning two weeks ago, one of the plant's two slab casters, which molds molten steel into slabs up to 104 inches wide, was down. A handful of workers climbed over it with flashlights, trying to fix it. Under Bethlehem Steel, there were 600 maintenance people whose only job was to fix machines that went down. But to save money, International Steel Group Inc., which bought Bethlehem Steel's assets in May 2003, put 120 maintenance workers on double-duty as operators who would make repairs if needed.

The union has managed to get about half the transferred workers back into maintenance, said John Cirri, president of United Steelworkers of America Local 9477. However, Mittal hasn't budged on the rest, Cirri said.

To further cut costs, Mittal is considering closing or downsizing the plant's machine shop, where parts are repaired. That would be a mistake, Cirri said, because much of the equipment is so old that replacement parts are no longer sold. Even if parts were available, the equipment has been patched up so many times over the years that a new part wouldn't fit, he said.

"Maintenance at the plant is putting out fires and putting Band-Aid solutions on things," he said. "At some point, you're going to have to pay the piper."

Russo said management is working with the union to restructure the shop to make it more competitive.